Older adults line up for free meals near Tapgol Park in Jongno District, central Seoul, in early 2025.YONHAP
Shin Sung-sik
The author is a welfare specialist reporter at the JoongAng Ilbo.
Since 2021, 859 legislative amendments have been posted on the government’s National Participation Legislation Center. Which has drawn the most public comments? The proposed revision to the Comprehensive Real Estate Holding Tax Act, preannounced by the Ministry of Economy and Finance on Aug. 4, drew more than 7,000. An Income Tax Act revision concerning capital gains tax ranks fourth. Opposition dominates both.
If enacted, the measures will affect not only owners of one highly desirable home but those with a more modest single home. The government counters criticism by saying housing should not be an object of speculation or investment. Finance Minister Koo Yun-cheol put it succinctly: “A home is not something to buy but a place to live.”
Yet welfare programs treat a home as more than a residence, regardless of its value. They effectively equate housing with income. Forty-nine welfare programs run by central government agencies, including basic livelihood assistance, the basic pension and artists’ welfare programs, do so. Eligibility for other benefits, including senior jobs, longevity allowances and free meals, is also often tied to basic pension eligibility.
For basic livelihood assistance, a Seoul home’s assessed value is converted into monthly income at 1.04 percent up to 172 million won ($121,769) and 4.17 percent above that threshold. At 1.04 percent, after the basic property deduction, the calculated monthly income can exceed 760,000 won. The basic pension uses a 0.34 percent conversion rate.
There are concerns the tax revisions will raise jeonse and monthly rents. Higher housing costs can also raise property-based national health insurance premiums. Tenants are not exempt. A 1 billion won jeonse, or lump-sum key money lease, can generate premiums exceeding 120,000 won a month. If an 800 million won jeonse rises to 1 billion won, the monthly premium increases by 15,000 won. Homeowners face similar burdens: A home worth 1.4 billion won can generate about 150,000 won in monthly premiums and one worth 3 billion won about 210,000 won.
The implicit message of the revisions is that if taxes become unaffordable, owners should sell and move. That is easier said than done.
According to Ministry of Data and Statistics migration figures, the annual moving-out rate last year among people 65 and older was 4.6 to 6.3 percent, far below the 10 to 26 percent rate among people in their 20s through 40s.
Older people often remain in the same home for 20 or 30 years. For seniors, managing chronic illnesses and maintaining social networks can affect longevity. Moving means changing familiar neighborhood clinics, potentially disrupting high blood pressure or diabetes care. Friends become distant. Familiar mountains and parks disappear. A new gym, cultural center, church, senior center or welfare center must be found. Weakened relationships can damage mental health, particularly for less sociable older men.
One commenter on the legislation center wrote: “I never speculated in real estate and have lived in one home for 30 years. Since retirement, I have barely managed on my pension. I paid the comprehensive real estate holding tax without complaint. Next year, if I pay the taxes from my 2 million won pension, nothing will be left.”
Even that pension is relatively high. As of April, only 1.92 percent of National Pension recipients received more than 2 million won a month. Even affluent seniors have limited room.
For an older person, one home is an essential good, whether expensive or not. Korea should consider treating owner-occupied homes more generously in welfare calculations. Conversion rates for homes owned by basic livelihood recipients should also be lowered.
Other countries offer precedents. According to the Ministry of Health and Welfare, Britain and the United States exclude owner-occupied homes from welfare asset calculations regardless of value. Germany exempts homes below certain size limits, while Japan generally exempts homes unless they are expensive.
Few countries have experienced housing-price increases like Korea. People in their 30s stretch their finances to buy aging apartments on the outskirts, while older people hold onto homes until death. Squeezing people simply for owning one home is not desirable.
This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
